Lansner: 2012 housing oomph no fluke

After all the damage caused by the great real estate debacle of the last decade, I can understand some healthy skepticism about turns in this trade. But last year surprised every expert to the upside. Orange County sales were up 19 percent to a six-year high. The local median selling price finished the year at a four-year high, up 17 percent in 2012. It was no fluke.

Certainly, the government added some fuel to the fire – such as cheap money and limits on foreclosures. But what makes 2012 remarkable is that it still isn't easy to get a mortgage for a residence, and investors must be cash players. The improving job market, rising rents and overall confidence were all motors behind the 2012 buying and pricing surge.

But doubts persist. So, for those reasonable skeptics, here are my answers to questions you may be mulling.

Me: Forget about what the median – the number smack in the middle of a data set – might say about what prices sellers are getting.

Yes, a key story line in 2012 was that the supply of cheaper homes to buy became somewhere near zero. But, remember, a house sale takes two to tango. And I prefer to ponder the median price as a statement about what buyers are willing to pay.

What we know about the Class of 2012 homebuyers was that they were willing to pay more for housing. That in itself is a sign of consumer confidence.

If what we hear from numerous real estate professionals is correct, Orange County would see even more homebuying if the supply of cheaper homes were greater. Yes, that push might trim the median – but it would also make the selling pace even more noteworthy.

Skeptic: Aren't these sales figures still low, by historical standards?

Me: This was Orange County's busiest year since 2006 – finished off by the fastest-selling December since 2005. And, 2012 was a 17 percent improvement over 2011's pace. But, to be fair, the year's buying was 20 percent below Orange County's 1988-2011 average sales count.

A healthy debate is brewing about what the "new normal" will be for housing – a reality etched into the industry by Orange County's six consecutive years of below-average activity.

More than a few housing pros guess that sales volumes won't return locally to previous peaks any era soon because: for one, new-home building will be restrained for numerous reasons; and secondly, buyers are not expected to continually move up – generating added transactions – like they previously did.

Skeptic: Isn't this all about cheap mortgages? They can't stay this low forever!

Me: DataQuick compiles an estimate of the typical first-year payment for new homebuyers. This metric bottomed in March 2012 at the lowest cost in a decade – literally cut in half from its peak.

Since then, homebuyers have begun to pay up, even when looking at payments. This index jumped by 12 percent through December – and was up 2 percent in a year for the month. That's the first year-over-year gain in this payment benchmark since July 2010 – when tax incentives for buyers were ending. So I'm guessing that folks are beginning to pay some premium prices.

Perhaps, this is the rate bottom. What does that mean?

Since 1988, mortgage rates have risen in six years. In all of those years, DataQuick showshome prices rose (averaging 10 percent), but homebuying fell (by an average drop of 10 percent!)

Note: Rates often rise when the economy is improving – and more robust business conditions may get more potential buyers active...

Skeptic: What about all those foreclosures that have been put off by banks?

Me: DataQuick tells us that defaults filed on Orange County properties last year fell 27 percent vs. 2011 – to the lowest level since 2006. Actual foreclosures fell 37 percent in the year to the lowest mark in five years.

Some of that drop may be lenders slowing their work to meet various regulatory mandates, but also it's a sign of a recovering housing market.

Common thinking in the real estate trenches says that any new supply of bank foreclosures hitting the resale market would likely be quickly snapped up.

Skeptic: Even if I believe these improvements are real, the economy doesn't justify – or won't sustain – real estate's upswing.

Me: Granted, if the national or regional economy does tank, housing won't fare well.

But to my eye, the economy is performing admirably – especially noting the high level of self-created or misguided doubts.

Assuming the economy chugs only along modestly, that should be enough broad-based oomph to keep the real estate market stable, if not fuel further gains.